William E. Stricker v. David A. Johnson
436 F.3d 875
8th Cir.
2006
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Docket

William E. STRICKER, Pamela Hines Stricker, Ozark Management, Inc., Allergy & Asthma Consultants of the Ozarks, Ltd., Plaintiffs-Appellants, v. UNION PLANTERS BANK, N.A., Great Plains Airline Holding Co., Defendants, David A. Johnson, Steven R. Berlin, Tom Kimball, Tammie Maloney, Jeff Sullivan, Donald L. McCorkell, Burt B. Holmes, John H. Knight, Defendants-Appellees.

No. 05-1677

United States Court of Appeals, Eighth Circuit.

Submitted: Nov. 16, 2005. Filed: Feb. 3, 2006.

437 F.3d 875

We review the reasonableness of a sentence for an abuse of discretion.

. “There is a range of reasonableness available to the district court in any given case.”
. In choosing a sentence, a district court can abuse its discretion if it “fails to consider a relevant factor that should have received significant weight, gives significant weight to an improper or irrelevant factor, or considers only appropriate factors but nevertheless commits a clear error of judgment by arriving at a sentence that lies outside the limited range of choice dictated by the facts of the case.”
. After reviewing the district court‘s stated reasons for Brinton‘s sentence and the record in light of § 3553(a) for Brinton and McMannus, we hold that the district court abused its discretion by arriving at sentences outside the ranges of reasonableness.

In Brinton‘s case, the district court imposed a sentence of 120 months, 142 months below the low end of the presumptively reasonable guidelines range, “[p]rimarily based on the fact that [Brinton had] no prior criminal history points.” See 18 U.S.C. § 3553(a)(1) (instructing the sentencing court to consider “the history and characteristics of the defendant“). In light of § 3553(a), we do not believe that Brinton‘s lack of criminal history, which is one of the considerations that determined her advisory guidelines range, see U.S.S.G. ch. 4, or anything else in the record justifies a variance of this magnitude. The sentence selected by the district court, a 54 percent variance, was outside the range of reasonableness. Therefore, we vacate Brinton‘s sentence as unreasonable.

In McMannus‘s case, the district court failed to provide any explanation for imposing a sentence of 24 months, 33 months below the low end of the presumptively reasonable guidelines range. While we can identify factors that may warrant a minor variance from the guidelines range, e.g., McMannus put himself through community college while on pretrial release, see 18 U.S.C. § 3553(a)(1), we find nothing in the record which would justify a variance of this magnitude under § 3553(a). The sentence selected by the district court, a 58 percent variance, was outside the range of reasonableness. Therefore, we vacate McMannus‘s sentence as unreasonable.

III. CONCLUSION

For the reasons discussed above, we vacate Brinton‘s and McMannus‘s sentences as unreasonable and remand both cases for resentencing consistent with this opinion.

Richard M. Paul, III, argued, Kansas City, MO (R. Lawrence Ward, Kansas City, on the brief), for appellant.

Joel L. Wohlgemuth, argued, Tulsa, OK (Jon E. Beetem, Jefferson City, MO, on the brief), for appellee.

Before MURPHY, BOWMAN, and GRUENDER, Circuit Judges.

BOWMAN, Circuit Judge.

William Stricker, Pamela Stricker, Ozark Management, Inc., and Allergy & Asthma Consultants of the Ozarks, Ltd. (collectively, “the Strickers“) appeal from the District Court‘s1 denial of their motion for leave to amend their complaint against the appellees—each a current or former director of Great Plains Airlines Holding Company (“Great Plains“). We affirm.

In September 1999, the Strickers obtained a $21,800,000 loan (the “Aircraft Loan“) from Union Planters Bank in Columbia, Missouri, to purchase airplanes for Ozark Air Lines, a new regional airline they intended to operate out of Columbia. Union Planters required that the Strickers execute an Unconditional Guaranty of Payment and Performance on the Aircraft Loan. In early 2001, the Strickers sold the majority of their interest in Ozark Air to Great Plains, a regional airline operating out of Tulsa, Oklahoma, and accepted shares of Great Plains stock in the transaction. Also in connection with the sale, Great Plains assumed responsibility for future payments under the Aircraft Loan and agreed to request that Union Planters release the Strickers from their personal guaranty on the loan. Union Planters, however, later rejected a written request from Great Plains to release the Strickers from their personal guaranty.

In March 2003, Union Planters sent the first of four default notices to the Strickers as guarantors on the Aircraft Loan, stating that Great Plains had failed to make several payments. Although Great Plains and Union Planters eventually restructured the loan agreement, Union Planters again refused to release the Strickers from their personal guaranty on the Aircraft Loan. When Great Plains later defaulted on the Aircraft Loan, the Strickers paid the outstanding loan balance pursuant to their personal guaranty.

The Strickers, as shareholders of Great Plains, filed a complaint alleging gross negligence and breach of fiduciary duty by the appellees in their capacities as current or former directors of Great Plains. The Strickers claimed that the appellees caused Great Plains to default on the Aircraft Loan and, because the appellees failed to obtain their release as guarantors, triggered the Strickers’ obligation to pay the outstanding balance of the loan. The District Court granted the appellees’ motion to dismiss the breach-of-fiduciary-duty and gross-negligence claims, reasoning that the Strickers’ alleged injuries arose out of their status as creditors of Great Plains and that they could not base their claims on duties owed to them as shareholders of Great Plains. Order of Sept. 7, 2004 at 7-8.2

The Strickers then sought leave to amend their complaint to assert a claim against the appellees for gross negligence and for breach of fiduciary duty allegedly owed to the Strickers not as shareholders but as creditors of Great Plains. The District Court denied the Strickers leave to amend, concluding that in their capacity as individual creditors of Great Plains, they did not have standing under Missouri law to assert breach-of-fiduciary-duty and gross-negligence claims directly against the appellees. The Strickers appeal, and we affirm.

The Strickers first argue that the District Court erred by applying Missouri law. In a diversity action, a district court sitting in Missouri follows Missouri‘s choice-of-law rules to determine applicable state law, and we review the court‘s con-clusions de novo. See

. When determining choice-of-law issues in tort actions, Missouri courts apply the “most significant relationship” test.
. This test requires a court to consider: “(a) the place where the injury occurred, (b) the place where the conduct causing the injury occurred, (c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship, if any, between the parties is centered.” Id. n. 6 (quoting Restatement (Second) of Conflict of Laws § 145 (1971)). After considering these factors, the District Court concluded that Missouri law applied to the Strickers’ claims because the Strickers were Missouri residents; the relationship between the litigants arose solely from an agreement regarding the sale of Ozark Air, an airline carrier incorporated in and operating out of Missouri; and the Strickers’ claims stemmed from a loan secured in whole or in part by property located in Missouri. For the reasons given by the District Court, we agree that Missouri law applies to the Strickers’ claims.

The Strickers next argue that the District Court erred in denying their motion for leave to file a second amended complaint. Although “leave to amend should be granted freely ‘when justice so requires,‘” it may be denied if an amendment would be futile.

(quoting Fed.R.Civ.P. 15(a)). When a district court concludes that an amendment would be futile because “no actual amendments to the complaint are possible, we review the denial of leave to amend for abuse of discretion.”
(citing
). On the other hand, when a district court concludes that an amendment would be futile because “a specific allegation, even if amended, would fail to state a claim as a matter of law, we review the denial de novo.”
(citing
); see also
(noting that while we generally review the denial of a motion to amend for abuse of discretion, “for the narrow issue of futility, we review de novo“). Although the parties disagree about the applicable standard of review, we conclude that under either standard the Strickers have not shown that an amendment would save their claims.

The District Court denied the Strickers’ motion to amend based on its conclusion that “an individual creditor does not have standing to assert a breach of fiduciary duty claim against corporate directors.” Order of Nov. 16, 2004 at 4. In

, a decision published after the District Court issued its order in this case, the Missouri Court of Appeals considered and rejected a claim similar to the fiduciary-duty claim asserted by the Strickers. Drummond sued St. Louis Coke‘s directors, claimed that the directors caused St. Louis Coke to default on payments due to Drummond and thereby breached a fiduciary duty owed to Drummond as a creditor of St. Louis Coke. In rejecting Drummond‘s claim, the Missouri Court of Appeals observed that “no Missouri case has held there to be a cause of action for breach of fiduciary duty by a corporate director to a creditor of the corporation.”
, 2005 WL 2648443. The court acknowledged, however, that “in the limited situation where... it is conclusively established that [the corporation] is insol-vent,” a director may be liable to creditors of the corporation because “[i]n such cases the corporation [is] effectively de facto dissolved, placing the directors... in a trustee-like position for the equal benefit of all creditors.”
, 2005 WL 2648443 (emphasis added).

The Strickers are not suing on behalf of all creditors of Great Plains—they seek only an individual recovery. Accordingly, even if they “conclusively established” that Great Plains was insolvent, thus triggering the appellees’ “trustee-like” duty to all creditors of Great Plains, they do not have standing to sue for a full individual recovery of the outstanding balance on the Aircraft Loan. We conclude that the District Court did not err, much less abuse its discretion, in denying the Strickers’ motion for leave to amend their complaint. We affirm the judgment of the District Court.

Notes

1
The Honorable Nanette K. Laughrey, United States District Judge for the Western District of Missouri.
2
The Strickers do not challenge this ruling.